Living wage estimate rises

Living wage campaigners say it
now costs $18.80 an hour to feed two adults and two children
in New Zealand.

The new figure, up 2.1 per cent from the campaign's original
estimate last year of $18.40 an hour, is more than $5 higher
than the legal minimum wage of $13.75, but the Government is
expected to lift the minimum from April 1 to about $14 an
hour.

The figure is based on calculations by the Anglican Family
Centre research unit of the gross hourly wage required for a
family with two children where one adult works fulltime and
one half-time at the same wage rate.

The gross wage had to go up by more than the inflation rate
of 1.6 per cent in the past year because higher wages reduce
the family's entitlement to family tax credits.

The campaign, backed by unions and churches, also unveiled a
"living wage employer trademark" at a function today at a Mt
Eden restaurant, O'Sarracino, which has committed to paying
the living wage when it can afford it - though not yet.

A report by Family Centre analysts Rev Charles Waldegrave and
Dr Peter King said the living wage was never intended to be
compulsory.

"It carries moral force and tests business ethics," they
said. "The living wage enables an employer to know that what
s/he pays a worker is sufficient for them to live modestly
and participate in society."

The calculation is based on surveyed spending by the poorest
half of Kiwi families with two adults and two children,
adjusted to include average NZ-wide rents for the cheapest
quarter of three-bedroom houses taken from tenancy bond data,
and food costs which meet Otago University nutritionists'
calculation of a "basic"diet of nutritious food.

The effect is to give much more weight to both housing and
food than the weightings used in Statistics NZ's broad-based
consumers price index. Average lower-quartile rents rose 1.8
per cent from $275 a week in June 2012 to $280 last June, and
the cost of the basic food diet for two adults and two
children rose by 2.7 per cent, from $226 to $232.

As it did last year, the report notes that the average rent
figure falls far short of the lower-quartile average in
Auckland, which was $438 a week last year. But once again the
researchers decided against calculating a separate "Auckland
living wage"because of the advantages of a single national
figure for employers to aim for.

They said last year that Government criteria for the
accommodation supplement should be adjusted to take account
of much higher rents in Auckland, but Housing Minister Nick
Smith said this month that there no current plans to review
the supplement.

The report found that the total living costs for the average
national lower-quartile family rose by only 01.1 per cent in
the year to last June, from $1038 a week to $1044.34.

It said gross wages would need to rise by 4 per cent, from
$18.40 to $19.14 an hour, to yield a 1.1 per cent increase in
net income, because of the clawback of family tax credits.

But it plumped for an increase of only 2.1 per cent to $18.80
an hour in line with the average ordinary-time hourly wage,
which rose from $26.96 an hour in June 2012 to $27.53 last
June.

"Because the living wage functions like any other wage
agreement once it has been introduced, it is considered that
updates, as opposed to full reviews, should relate primarily
to wage movements," it said.

Labour Minister Simon Bridges said the figure seemed to be
"much more what they feel rather than what good evidence
suggests is right".

He said raising the legal minimum wage to the original figure
of $18.40 would cost employers $2.5 billion a year and wipe
out 25,000 jobs. He said the Government would announce a new
minimum wage for the tax year starting on April 1 "soon".